Kraft, Kellogg, Hershey and Mondelez Whet Appetite for Food Stocks

NEW YORK (TheStreet) -- Food stocks are hot. If you need proof of this, think of the battle over Hillshire Brands that started when it announced it was buying Pinnacle Foods (PF) until Tyson Foods (TSN) and others went after Hillshire. Tyson Foods won.

So investors with an appetite for food stocks can do their due diligence in a number of ways. Those who like getting "up close and personal" were in Chicago for FMI Connect, The Global Retail Food Experience.

Companies with exhibits at the conference ending Friday ranged from prominent blue-chips Kraft (KRFT) , Hershey Co. (HSY) , Mondelez International (MDLZ) and Kellogg (K) to promising smaller companies. For value, income and growth investors, looking at the food sector, there was something for everyone.

Here's how some of the big companies have been doing:

Kraft Foods is up for the last week, month, quarter, six months and year of market action. It shares are trading around $59, up 9.4% for the year to date.

Even with those impressive gains, Kraft Foods still has a tasty dividend: a yield of around 3.50% when the average for a member of the Standard & Poor's 500 is under 2%. Kraft has such famous brand names as Kool Whip, Kool Aid and Grey Poupon.

With about 60% of its sales from outside the United States, Kraft Foods is a good play on growth around the world.

Mondelez International is another food stock with well-known brands that offers investors profits from international growth.

Kraft and Mondelez were once part of the old Kraft and when the company split in 2012, Mondelez gained such familiar household brands as Oreo cookies, Nabisco and Tang. Activist investor Norman Peltz has been pressuring the management of Mondelez International to make changes to enhance shareholder value. It must be working because the stock, which trades around $37, is up nearly 6% for the year to date.

From its headquarters in Battle Creek, Michigan, the name Kellogg is synonymous with cereal. It's  the world's largest producer.

In the cupboard for Kellogg are such cereals as Frosted Flakes, Special K and Rice Krispies.

Cereal is not just a breakfast staple in the United States -- Kellogg sells products in more than 180 countries. Nor is cereal all that Kellogg's sells: It also owns Keebler cookies, Cheez-its and other foods.  Kellogg shares trde at $67, up nearly 10% for the year to date.

Like one of its candy bars, Hershey's is solid. Shares closed at nearly $97, down a fraction for the year to date but up over 8% for the past 52 weeks.

Hershey may not be a growth machine but it does have an 11.60% profit margin with a return-on-equity of over 50%. As with Kraft, Mondelez, and Kellogg, Hershey is also a low-beta stock. Studies have show that these produce the highest returns over time.

With a 2% yield and 9.17% dividend growth rate, Hershey offers a total return that rewards long term shareholders.

There is a great deal of consolidation taking place in the food sector.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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